CNA Financial Announces First Quarter 2013 Results:

CNA Financial Announces First Quarter 2013 Results:

• Net Operating Income of $231 Million

• P&C Net Written Premium Growth of 10%

• Book Value Per Share Excluding AOCI of $43.30, an Increase of 2%

• Operating ROE of 8%

• Quarterly Dividend of $0.20 Per Share

CHICAGO--(BUSINESS WIRE)-- CNA Financial Corporation (NYS: CNA) today announced first quarter 2013 results, which included net operating income of $231 million, or $0.86 per share, and net income of $250 million, or $0.93 per share. Property & Casualty Operations' combined ratio for the first quarter was 101.5%.

CNA Financial also declared a quarterly dividend of $0.20 per share, payable May 29, 2013 to stockholders of record on May 13, 2013.

Property & Casualty Operations' net operating income was $257 million for the first quarter of 2013 as compared with $271 million in the prior year quarter. Improved non-catastrophe current accident year underwriting results were more than offset by lower net investment income, higher catastrophe losses and decreased favorable net prior year development. Net written premiums grew 10% year over year, primarily due to increased rates across both CNA Specialty and CNA Commercial.

Net operating results for our non-core segments improved $19 million as compared with the prior year quarter. Results in the Life & Group Non-Core segment improved primarily due to favorable experience in our long term care business.

Pretax net investment income decreased to $633 million for the first quarter of 2013 as compared with $648 million in the prior year quarter. The decrease was primarily driven by lower fixed maturity securities income due to the effect of purchasing investments at lower interest rates, partially offset by a higher invested asset base. Our limited partnership portfolio produced consistently superior returns in both periods.

After-tax net realized investment gains decreased to $19 million for the first quarter of 2013 as compared with $24 million for the prior year quarter, driven by lower realized gains on sales of securities, partially offset by lower other-than-temporary-impairment (OTTI) losses recognized in earnings.

Property & Casualty Operations

"While we are encouraged by our growth momentum, our primary focus remains the need to drive improvement in our underwriting margins, which improved modestly in the first quarter. We expect to accelerate our progress through the remainder of 2013 and into 2014 as sustained rate increases and non-rate underwriting actions continue to improve our results," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation.

• Net written premiums increased $38 million for the first quarter of 2013 as compared with the prior year quarter. This increase was primarily driven by increased rate. Average rate increased 7% for the first quarter of 2013 as compared with an increase of 3% for the prior year quarter for the policies that renewed in each period. Retention of 86% was achieved in each period.

• Net operating income increased $8 million for the first quarter of 2013 as compared with the prior year quarter. This increase was primarily due to improved underwriting results, partially offset by lower net investment income.

• The combined ratio improved 2.3 points for the first quarter of 2013 as compared with the prior year quarter. The loss ratio decreased 2.0 points, due to both higher favorable net prior year development and an improved current accident year loss ratio. The expense ratio improved 0.8 point, primarily due to the impact of a higher net earned premium base.

• Net written premiums increased $75 million for the first quarter of 2013 as compared with the prior year quarter. This increase was primarily driven by increased rate. Average rate increased 9% for the first quarter of 2013, as compared with an increase of 5% for the prior year quarter for the policies that renewed in each period. Retention of 78% and 77% was achieved in each period.

• Net operating income decreased $14 million for the first quarter of 2013 as compared with the prior year quarter. This decrease was primarily due to lower net investment income, higher catastrophe losses and decreased favorable net prior year development. These unfavorable impacts were partially offset by improved non-catastrophe current accident year underwriting results.

• The combined ratio increased 0.6 point for the first quarter of 2013 as compared with the prior year quarter. The loss ratio increased 1.0 point, primarily due to the impacts of higher catastrophe losses and decreased favorable net prior year development, partially offset by an improved current accident year non-catastrophe loss ratio.

• Hardy, a specialized Lloyd's of London underwriter, was acquired on July 2, 2012.

• Net written premiums were $55 million for the first quarter of 2013. Average rate increased 1% for the first quarter of 2013 for the policies that renewed in the period. Retention of 70% was achieved in the period.

• Results included non-run rate purchase accounting expenses of $3 million and foreign currency transaction losses of $2 million. No catastrophe losses were incurred in the period.

• The combined ratio excluding catastrophes and prior year development was 104.1% for the first quarter of 2013. The expense ratio was 56.8% for the first quarter of 2013, which was adversely affected by the level of premiums, including unfavorable premium development of $4 million.

• Net operating results improved $19 million for the first quarter of 2013 as compared with the prior year quarter. While the improved results reflect favorable mortality outcomes across all of our life businesses, they were primarily attributable to favorable morbidity and persistency in our long term care business.

• Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including CNA Re and A&EP. Results in 2013 were comparable to the prior year period.